TII Innovation Journal

Foresight 2020: Economist's Intelligence Unit

INPUT FOR THIS WEEK'S CONFERENCE IN NEWCASTLE

Foresight 2020: "

‘Foresight 2020″, a new research report written by the Economist Intelligence Unit and sponsored by Cisco Systems, assesses likely changes to the global economy, to eight major industries and to corporate structures over the next 15 years.

More than 1,650 senior executives, analysts and policymakers from across the globe took part in a survey and a series of in-depth interviews conducted especially for the report. The report also showcases the Economist Intelligence Unit’s new long-term growth forecasts.

Among the principal findings from the research are the following:

Globalisation

It’s too early to talk of Asia’s century, but there will be a redistribution of economic power. Emerging markets, and China and India in particular, will take a greater slice of the world economy. Non-OECD markets will account for a higher share of revenue growth between now and 2020 than OECD economies. Labour-intensive production processes will continue to shift to lower-cost economies, which will still enjoy a massive wage advantage over developed markets. The pace of globalisation will be arguably the critical determinant of the rate of world economic growth.

Demographics

Population shifts will have a significant impact on economies, companies and customers. The favourable demographic profile of the US will help to spur growth; ageing populations in Europe will inhibit it. Industries will target more products and services at ageing populations, from investment advice to low-cost, functional cars. Workforces in more mature markets will become older and more female.

Atomisation

Globalisation and networking technologies will enable firms to use the world as their supply base for talent and materials. Processes, firms, customers and supply chains will fragment as companies expand overseas, as work flows to where it is best done and as information digitises. As a result, effective collaboration will become more important. The boundaries between different functions, organisations and even industries will blur. Data formats and technologies will standardise.

Personalisation

Price and quality will matter as much as ever, but customers in developed and developing markets will place more emphasis on personalisation. Products and services will be customisable, leading firms to design products in a modular fashion and, in the case of manufacturers, assemble them in response to specific customer orders. Customers and suppliers will be treated in different ways, depending on their personal preferences and their importance to the business.

Knowledge management

Running an efficient organisation is no easy task but it is unlikely on its own to offer lasting competitive advantage. Products are too easily commoditised; automation of simple processes is increasingly widespread. Instead, the focus of management attention will be on the areas of the business, from innovation to customer service, where personal chemistry or creative insight matter more than rules and processes. Improving the productivity of knowledge workers through technology, training and organisational change will be the major boardroom challenge of the next 15 years.

Sources

• Economist Intelligence Unit - Foresight 2020: Economic, industry and corporate trends
• Download the report (PDF file)

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(Via URENIO Portal: Innovation, Environments of Innovation, Intelligent Cities and Regions.)

The Business Leadership Forum: A Variety of Innovation Styles

Irving Wladawsky-Berger of IBM reports from the IBM Rome Business Leadership Forum in April 2006

The Business Leadership Forum: A Variety of Innovation Styles: "

Earlier in April I participated in IBM's 2006 Business Leadership Forum (BLF).  The forum included several hundred leaders of industry, government and academia from over 50 countries who gathered in Rome for two days of discussions about the challenges and opportunities facing business in the 21st century.  This is the fourth such forum we have held and the first global one.  In 2003, our first BLF in San Francisco began a dialogue on the proper business strategies to pursue in the wake of the dot-com implosion.  In 2004 and 2005, we held regional forums in Paris and Shanghai respectively.  Having learned from these earlier forums that business issues in each region are not dramatically different, we decided that for 2006 the BLF would include participants from around the world. 

I found the presentations and panels over the two days of the Rome BLF fascinating.  It was not just the content; it was also the different leadership styles and approaches to innovation represented by the speakers.  Let me talk about a few of them.

Sam Palmisano

IBM Chairman and CEO Sam Palmisano opened the forum by observing that innovation is an imperative for anyone wanting to differentiate their companies and avoid competing solely on costs in a crowded, commoditized marketplace.  He talked about some of the powerful forces driving innovation in business.  First, he told the audience that one unavoidable fact of which all should be aware is that globalization is inevitable and that the world as a result is becoming more integrated.  He then linked globalization to economic expansion and, in particular, to the growing percentage of worldwide GDP coming from emerging markets -- especially China and India where a young, vibrant, talented set of professionals is eagerly entering the global economy. 

Sam then talked about the unpredictable environment we have been living in for the past few years, and the difficulty in planning due to the rate and pace of change inspired by geopolitical and security issues,  economic fluctuations, market bubbles and what have you.  As a result, business models are being furiously challenged by world events beyond their control and occurring anywhere, which in today's integrated environment will have a rippling effect across the globe. 

In such an environment, Sam went on to say, a business has only a couple of choices.  It can hunker down and try to ride out the changes, hoping things will return to the more stable world of the past; or it can create a strategy and a set of business models that allow the business to thrive and be successful in the face of the realities of this emerging world -- in other words, embrace innovation across the business. 

John Browne

BP Group Chief Executive John Browne spoke next.  (By the way, for the last few years I have been a member of BP's Technology Advisory Council.)  Lord Browne said that innovation was all about organizing the business in ways that allow people to explore possibilities and take risks confidently.  Innovation, in his opinion, is part of the process of anticipating and responding to changing needs and, since human needs are constantly evolving, innovation is the key to the long-term competitive success of any business.  He went on to talk about innovation in the energy business, summarizing its key challenges as enhancing energy security by finding reliable supplies of energy, and addressing climate change concerns by reducing the environmental impact of energy production and use.

Lord Browne then talked about some of BP's efforts in these areas.  For example, the amount of oil typically recovered from a field is a bit over 50 percent, up from around 25 - 30 percent when he first joined the industry forty years ago.  He believes oil recovery can be driven beyond sixty percent through advanced simulations that convey a better idea of where the oil is, and advanced technologies like horizontal drilling to get at it.  He talked about some very exciting pilot projects BP has under way in Scotland and California to produce clean, carbon-free electricity through a technology called carbon sequestration which extracts carbon from hydrocarbons and buries it in an existing oil or gas field.  Finally, he briefly mentioned some of the newer, riskier projects in search of greener and renewable energy sources, such as crops that produce plentiful, clean energy.

Lord Browne made several comments about the issues surrounding climate change that I found particularly compelling.  He acknowledged that there are multiple points of view in this area:  ‘The science of climate change is still provisional.  But then, all science is provisional,’ and then added ‘What seems clear is that we can't ignore the mounting evidence.  And no business whose purpose is to supply energy sustainably can turn away from the challenge or pretend it's someone else's problem.’  Later on in his talk he said ‘. . . innovation can help provide answers and help us to escape from the sense of fatalism which starts from a belief that climate change is such a huge global problem that there's nothing that can be done about it.  That is wrong.  There are lots of things that can be done.’

Sunil Mittal

BP and IBM are very good examples of well established, multi-national companies looking to transform themselves through innovation.  A very different innovation story is that of Bharti Enterprises, India's leading telecom conglomerate.  Sunil Mittal, Bharti's Chairman and Group Managing Director talked about the major challenges Bharti has faced over the last few years as India navigates some turbulent waters.  He explained that, with India's annual per capita income only a bit over $600, cellular phone service has to be provided for the Indian market at a very low price, around 2 cents a minute or less.  The only way to provide telecom services so inexpensively and run a profitable business is to take advantage of India’s large population and economic growth, scaling up the business rapidly by adding many new customers every month.   

To do this, Sunil Mittal had to develop a radically innovative business model:  focus only on the customers and outsource just about everything else.  In other words, put all the energy of the business into attracting, supporting and retaining customers and accept the fact that pretty much everything else has been commoditized and should be outsourced, including managing all the IT equipment and the network.  He said there was a lot of resistance to this strategy.  People were calling him from around the world saying that IT and the network were the heart of a telecom company.  ‘You cannot give your heart away and then run a business’, they said to him. 

Mittal begged to differ, saying the customer, not the technology, was at the heart of his business and then proceeded to implement the strategy.  He further confounded everyone by not picking Indian companies as his outsourcing partners, choosing instead IBM to run IT and Nokia and Ericsson to run the network, because he wanted highly experienced, international companies that could keep up with the torrid pace of Bharti’s growth. Today, Bharti is one of the top five companies in India, and Mittal’s vision for it is to be India’s most admired brand by 2010.   

Linus Torvalds

Linus Torvalds represents a totally different innovation leadership style.  At the BLF I introduced him by reminding the audience that a community of the best and brightest programmers around the world is developing Linux, and that in my opinion the Linux community works so well and has been so productive because of Linus' creativity certainly, but also his leadership qualities. 

Linus told the audience that he was primarily an engineer, not at all a visionary leader, and that he spent all his energies focusing on the problems right in front of him.  He talked about how Linux is organized and explained that it has no central authority at all - a phenomenon he attributed to his inability to be a great leader.  Instead, Linux has a distributed decision-making process in which different people decide which ideas they will accept from contributors all around the world.  He answered a question as to how the different people who make decisions in the Linux community are picked, and replied that it was all based on trust and connections.  There is a built-in mechanism that allows good people automatically to strengthen their own connections to everyone else through a combination of good technical and communication skills. 

Linus also explained why people would spend so much of their time on a volunteer project like Linux with no immediate financial gain.  As an engineer, he said, there is no better feeling than solving a problem that has bedeviled you for days.  Suddenly a light goes on, and you get the rush of having finally solved it.  In the end, he said, a lot of technical people find solving such technical problems very satisfying, and that is why they do it.

I stand by the words I used to introduce Linus Torvalds – he is indeed a very good and innovative leader, with his own unique style that has proved tremendously effective in leading one of the most powerful forces in IT today. 

Tom Friedman

Let me close with an observation made by Tom Friedman, best-selling author of ‘The World is Flat’.  He addressed the Rome Business Leadership Forum on tape and succinctly captured the necessity of everyone’s paying close attention to innovation.

'When the world is flat, whatever can be done will be done.  Pay attention to that.  Whatever the technology empowers and enables, whatever can be done will be done.

There's only one question left: will it be done by you or to you?  And that is really the challenge for every company.  You've got to understand and identify what the tools out there will enable you or your competitors to do, and you've got to do it before your competitors.

And that takes an innovative flare.'

So, what did I learn from the various talks and panels at the Business Leadership Forum.  One lesson is that no one approach to innovation and innovation leadership is best; rather, different approaches will work best in different situations and for different individuals. 

Another is that the era of competing to be the best is no longer enough; we are entering an era where we are competing to be unique.  And while in principle being the best is a zero sum game, different people and companies can each be unique in their own innovation style.   

"

(Via Irving Wladawsky-Berger.)

The World's Most Innovative Companies according to BUSINESS WEEK

READ this interesting article. There is a summary in Podcast format as well.

The World’s Most Innovative Companies: "To discover which companies innovate best — and why — BusinessWeek joined with The Boston Consulting Group to produce their second annual ranking of the 25 most innovative companies. More than 1,000 senior managers responded to the global survey, making it their deepest management survey to date on this critical issue. Today, innovation is about much more than new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most important, as the Internet and globalization widen the pool of new ideas, it’s about selecting and executing the right ideas and bringing them to market in record time. The new ranking has companies evoking all types of innovation. There are technology innovators, such as BlackBerry maker and newcomer Research In Motion Ltd., which makes its debut on the list at No. 24. There are business model innovators, such as No. 11 Virgin Group Ltd., which applies its hip lifestyle brand to ho-hum operations such as airlines, financial services, and even health insurance. Process innovators are there, too: Rounding out the ranking is Southwest Airlines Co. at No. 25, a whiz at wielding operational improvements to outfly its competitors. At the top of the list are the masters of many genres of innovation. Take Apple Computer Inc., once again the creative king. To launch the iPod, says innovation consultant Larry Keeley of Doblin Inc., Apple used no fewer than seven types of innovation. They included networking (a novel agreement among music companies to sell their songs online), business model (songs sold for a buck each online), and branding (how cool are those white ear buds and wires?). Consumers love the ease and feel of the iPod, but it is the simplicity of the iTunes software platform that turned a great MP3 player into a revenue-gushing phenomenon. Charts: Laurel Daunis-Allen/BW The BusinessWeek-BCG survey is more than just a Who’s Who list of innovators. It also focuses on the major obstacles to innovation that executives face today. While 72% of the senior executives in the survey named innovation as one of their top three priorities, almost half said they were dissatisfied with the returns on their investments in that area."

(Via URENIO Portal: Innovation, Environments of Innovation, Intelligent Cities and Regions.)

Innovation is the "yin" to globalization's "yang"

YET ANOTHER INPUT FOR THE TII ANNUAL CONFERENCE 2006, NEXT WEEK

Innovation is the "yin" to globalization's "yang": "

Frank Gens of IDC has written a great summary of the debate over innovation that recently took place at IBM's Business Leadership Forum in Rome. In his blog post, Frank addresses two 'nagging' questions about innovation, including one that was on the mind of nearly every business executive at the IBM event:  'Is innovation really as big a deal as IBM (and many other IT vendors) are making of it, or is it just the latest empty buzzword, destined to fade away in 18-24 months?'

The answer, not surprisingly, is that innovation really is a big deal, thanks primarily to the forces of globalization. Frank explains why:

'Why is the subject of innovation so important to business leaders?   The most obvious and powerful reason is globalization.  There is a direct linkage between the pressures of globalization and the urgent need for innovation, and this was right on display throughout the IBM event: from author Tom Friedman’s comments about the 'flattening world', right through to former EC Commissioner Mario Monti’s comments about the urgent need for structural reform in the Eurozone’s three largest countries...

Our research and others’ (including IBM’s recent CEO survey) show that innovation is seen by CEOs as a critical countermeasure to the growing pressures of globalization.  At IDC, we think of innovation as the 'yin' to the 'yang' of globalization: they have a strong positive-feedback relationship, with globalization fueling the need to innovate, and innovative companies being able to create value by leveraging globalization.  As I said at IDC Directions: 'Innovation is moving up the CEO’s agenda, and it will stay there as long as globalization is an issue - which will be for quite a while to come.'

Tags: innovation  globalization  yinyang

[Image: The Yin Yang Building]

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(Via Business Innovation 2005.)

Technology Drivers

The workshop  session "INNOVATION AND GLOBAL COMPETITIVENESS" (Information posted under "Globalisation debate at TII 2006 Annual Conference") will focus on Creativity as kay component by leader Guy Cloutier.   Some examples of creativity  (and potential technology drivers) are given in the article by Technology Review - 10 Emerging Technologies.  Nanotechnolgies appear to be coming of age and maybe will be the next tech spurt.  The article may be found at http://www.technologyreview.com/special/emerging/index.aspx

Interesting question to consider - who/what makes the greater impact - the creative individual or the market successful creative technology?

Smart City 2020

From URENIO about intelligent Cities and Regions to fuel the debate at TII's Annual Conference (Region-Technology-Foresight)

Smart City 2020: "

William J. Mitchell, Director of the Design Laboratory at MIT, writes about the emerging technologies that are poised to reshape our urban environments. Cities are fast transforming into artificial ecosystems of interconnected, interdependent intelligent digital organisms. This is the fundamentally new technological condition confronting architects and product designers in the twenty-first century.

The author argues that embedding intelligence in objects creates new functionality (that’s the usual motivation for doing it), but less immediately evident is that it also alters the shapes and sizes of parts and the spatial relationships among them. Eventually this enables surprising new forms to develop. As an example he mentions digital cameras. He describes the process of evolution of early models to a digital-imaging device that fits in our pocket, and finally its combination with a wireless telephone.

Mitchell notes that a particularly powerful design strategy under these conditions is to look for the ways that embedded intelligence loosens traditional relationships and constraints, and seize these as opportunities for fundamentally reimagining a product or system’s organization, shape, and scale. Following this, he presents five research projects:

   
• Concept car for General Motors from Mitchell’s Smart Cities research group in MIT.
   
• PlaceLab intelligent apartment from Kent Larson’s House_n research group in Cambridge.
   
• Smart parking from Carlo Ratti’s SENSEable City Laboratory.
   
• Free pixels in urban space from Mitchell’s Smart Cities research group in MIT.
   
• Robotic water droplets from Mitchell’s Smart Cities research group in MIT.

These projects, Mitchell says, intimate the emergence of a new stage in the evolution of cities. Preindustrial cities were mostly skeleton and skin — inert material arranged to provide shelter, security, and intensification of land use. In the industrial era, buildings and neighborhoods acquired more and more elaborate flow systems for water and energy supplies, sewage, ventilation, transportation, and trash removal. With their inputs, outputs, and artificial physiologies, they began to resemble living organisms. Today these organisms are developing artificial nervous systems that enable them to behave in intelligently coordinated ways. As the cities and their components become smarter, they begin to take new shapes and patterns. They become programmable. And the design of their software becomes as crucial — socially, economically, and culturally — as that of their hardware.

Sources

   
• BusinessWeek - Smart City 2020
   
• Metropolis Magazine - Smart City 2020 (revised version)

"

(Via URENIO Portal: Innovation, Environments of Innovation, Intelligent Cities and Regions.)

Creativity & Innovation in Science & Technology

Posted by Tim Janis:

Cloutier speaks of the need for change and adapting to current environment.  The following example is how Microsoft is changing.

Excerpted from Technology Review 
March 2005 - Microsoft: Getting from 'R' to 'D'
“The software giant's Beijing lab is spearheading a new way to turn research into products.”

By Robert Buderi, in Beijing

Executives from Microsoft’s Beijing research lab brainstormed a promising solution to a fundamental problem facing Microsoft and many other high-tech companies: how to move m ore innovations more swiftly and effectively from research to development to market. Their idea: a new type of organization designed to bridge the gap between "R" and "D" and in the process overcome many of the product development bottlenecks and geographic and cultural differences that impede today’s global corporations.

Given that it typically takes several years for research projects to yield anything that can be commercialized, moving innovations to development was hardly a top priority when the Beijing lab was formed in 1998. Early on, though, a group was set up to help researchers build demos for showing concept technologies to their Redmond research colleagues and to the business divisions—with two engineers or programmers assigned to each of about a dozen projects.

Dennis Adler, general manager of business development for ATC. Based in Redmond, he is the liaison between the center and Microsoft’s product groups, helping the business divisions understand what advances are emerging from Beijing and the ATC members understand development schedules and constraints. Many times, he says, product groups would have loved to incorporate some cool feature or technology created in one of Microsoft’s research labs but just didn’t have the staff to devote to it. “There are tech transfers that haven’t happened because of it,” he says. “So ATC was set up as a way to help close that gap. It’s all about lowering the impedance.”

Microsoft officials say they know of nothing else like the Advanced Tech­nology Center either inside their company or outside it. “We just invented it,” says Adler. At least in Beijing, an organization like the center wasn’t even thinkable until a few years ago, and its creation shows the benefits of constantly adapting operations as conditions change.

Can individuals, especially scientists and engineers be more creative.  According to the following it is possible. 

Creativity & Innovation in Science & Technology

How can I be creative and innovative in the field of science & technology?

At first it may seem tricky for some people to mix the rigorous, structure world of some scientific disciplines, and the creative world. However, with an open mind it is relatively easy to start looking and thinking in a more creative way, which when put into the scientific world can provide exceptional results.

When you look at the growth in most areas of science and technology, you will find the main advances have been associated with creative thinking followed by innovation to turn those ideas into reality. The precise concepts of creativity and innovation we can support you with.

Discussion Items Re Globalization

Posted by Tim Janis:

CREATIVITY EXAMPLES
BASIC POSITION

• How can a corporation evolve to a humanistic, creative organization and survive in today’s global market?
• What if it doesn’t evolve?
• Can all workers become more creative?  With what incentives?

ALTERNATIVE THOUGHTS

• What about technology as the primary driver of future corporations? Workers?

o    See for example “Globalization of Technology: International Perspectives” - Proceedings of the Sixth Convocation of The Council of Academies of Engineering and Technological Sciences; Janet H. Muroyama and H. Guyford, Editors – National Academy Press Web site here

o    According  to Ross, (Ross, David P. (1993). Family Security in Insecure Times. National Forum on Family Security, Canadian Council on Social Development) - Technology and globalization go hand-in-hand. Globalization unleashes technology, which in turn drives firms to plan production and sales on a global basis. Technology changes the work we do and in nearly all cases, the jobs created by it demand more education and training. It also changes the way business operates by transforming relationships between suppliers, producers, retailers and customers.  This opens the discussion of a unit entitled “Innovations in Technology and Globalization: Introduction to the Information Era in the on-line report  “Technology and Making Career Sense of Labour Market Information. “ By Elaine O'Reilly, Algonquin College and Diane Alfred, Human Resources Development Canada Web site here

• What about knowledge?  Is knowledge the real capital of the future?  If so will the creative corporation be able to manage it in a global environment?

• o    Paul Grogan, CEO of the Boston Foundation, summed it up succinctly by saying that the United States needs to develop and nurture its human capital ''to succeed in a competitive global environment that values knowledge and ideas above everything else."  Taken from The globalization of knowledge - By Zorica Pantic  April 5, 2006, The Boston Globe. 

Creativity Against Adverse Effects of Globalisation

Guy Cloutier has made his Position Paper for the Globalisation Debate at TII's Annual Conference (Topic introduced elsehwere on this blog earlier):

The emerging world economy is bringing with it new challenges like low-wage economies and staying ahead in this ever changing environment means being able to anticipate as well as incorporate innovation and creativity.

To conquer these challenges, both the human and the organization will have to recognize, understand, then deal with the dependencies that are presently hindering their growth and preventing them from realizing their aspirations.  Survival will require that they develop an innovative and evolutionary approach that focuses on prevention rather than reaction.  This “evolution” will give rise to a new awareness which recognizes the Human and the Organization as a sum far greater than its parts.

To this end, entrepreneur and speaker Guy Cloutier sees those challenges as a time when human beings will finally regain the power to decide what is best for them by realizing that they hold the essential elements for their personal autonomy.  As it now stands, we are victims of various control systems which tend to denature us, numbing any sense of our true reason for being.  The evolutionary organization of the future will realize this as counter-productive, leading it to place humans first…ahead of finance and technology as the need for personal self-fulfilment must be satisfied if a collective well-being is to be achieved.

Many organizations view the competition or “the low-wage economies” as a threat and have unwittingly placed all their hope on the cutting edge of technology to avoid being outpaced in their market.  Unfortunately, the supposed solution means a massive acquisition of technology at enormous costs or off-shore subcontracting in the hopes of reducing production costs and keeping the industry alive. What are the real costs and impacts of these decisions?  The organization must deal with an ever-increasing financial burden.  The employees and managers are in a quandary; their job security is in question, they are reluctant to change and have lost motivation.  Are there other solutions?  One possibility would be for upper management to acknowledge its most creative individuals who have certainly been waiting for this moment to put their latent potential to use.  They will now be in a perfect position to bring technical, scientific and human improvements to the company’s development.

The following chart is a comparative table illustrating the advantages of creativity over high technology or off-shore subcontracting.

View this photo

A dynamic and humane business will attract members by valuing their creativity instead of ignoring it for the sake of short-term gain.  This acknowledgement of human creativity can only strengthen long-term goals and develop the organization’s autonomy and freedom.

Human creativity is the heart of the evolutionary organization

 

The innovative Chinese automaker

Another notch in the belt of the BRIC! This is a good example of how Globalization links with Technology (Transfer) and Regional Foresight! A lesson to both here and there..(Comment by Max)

The innovative Chinese automaker: "

This has to be a source of consternation for any American company sharing its innovation & design expertise with business partners in China: the Wall Street Journal (link via Pittsburgh Post-Gazette) reports that Shanghai Automotive Industry Corp., a long-time partner of GM and Volkswagen in China, plans to go it alone and produce a luxury four-door sedan - all by itself - for the Chinese market. The new sedan will compete head-to-head with rival offerings from GM in China and there are even plans in the works to start exporting the Chinese-made and Chinese-designed car to Europe sometime in 2007:

'For years, Shanghai Automotive Industry Corp., a government-owned behemoth, has worked side by side with General Motors Corp. and Volkswagen AG on world-class assembly lines to build cars for the Chinese market. Now, the giant auto maker is getting ready to use the technical expertise and experience it has gained from these partnerships -- which turn out hundreds of thousands of Buicks and Chevys as well as VW Santanas and Passats a year -- to make its own high-end sedan.

Shanghai Automotive's shift from an ally of its foreign partners to a potentially dangerous rival is a sign of sweeping changes ahead for auto makers in the fast-growing China market, which has become an increasingly important source of sales and profits for U.S. and European auto companies. Prodded by Chinese economic planners, large state-run companies that have joint ventures with other foreign manufacturers, from Ford Motor Co. of the U.S. to Japan's Suzuki Motor Corp. and South Korea's Kia Motors Corp., are also moving to develop and sell more vehicles under their own brand names. The push comes amid a broader questioning of the role that foreign companies and brands should play in China's economy.'

A consultant for the automobile industry rings the alarm bell: 'This is a watershed in the development of the auto industry in China. The Chinese formed joint ventures for one purpose: to learn how to do it themselves one day. That day is here.'

So that's what happens - a big American company sends jobs and R&D know-how overseas in the hopes of expanding global market share, and it winds up with an ungrateful partner willing to bolt at the first opportunity? For GM, already beset by gargantuan financial woes, this has to sting. If nothing else, the decision by Shanghai Automotive means that the GM board won't be able to use the 'our cars don't sell in America, but we're doing real well in China' excuse anymore. In a prepared statement, GM tried to put a positive spin on the development, but we all know the company is smiling through gritted teeth: 'GM understands Shanghai Automotive's desire for further growth and is confident SAIC recognizes that the success of both companies in the China market is closely linked to the success of our joint ventures.'

More details about the decision by Shanghai Automotive to head off on its own can be found at CNN/Money. Details about Shanghai Automotive (not exactly a household word here in America) are also up at Wikipedia.

Tags: China  auto  GM  ShanghaiAutomotive  innovation  design

[image: AutoBlog]

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(Via Business Innovation 2005.)